Save Smart for Your First Home with an FHSA in Ontario- Open Your FHSA with Dave Financial Services Inc.
Why did the Canadian government launch the First Home Savings Account?
To make homeownership more affordable for first-time buyers, the Canadian government launched the First Home Savings Account (FHSA) program on April 01, 2023.
At Dave Financial Services Inc., we’re committed to helping individuals and families across Ontario, Canada, make the dream of homeownership a reality. The First Home Savings Account (FHSA) is a groundbreaking registered account that combines the tax-deductible benefits of an RRSP with the tax-free withdrawal perks of a TFSA. It’s the smartest way for first-time homebuyers in Ontario to build a down payment faster—and with fewer tax consequences.
Whether you’re just beginning to plan for your first home or you’re actively saving, our team at Dave Financial Services Inc. offers expert advice, custom strategies, and ongoing support tailored to your goals.
What is an FHSA and Why is it Important?
Launched in 2023 by the Canadian government, the First Home Savings Account (FHSA) is designed to help eligible Canadians save up to $40,000 toward the purchase of their first home. It’s a registered account that offers both:
- Tax-deductible contributions (like an RRSP), and
- Tax-free withdrawals when used to buy a qualifying first home (like a TFSA).
This makes it one of the top tools for first-time homebuyers in Ontario. This means you can reduce your taxes today and grow your savings tax-free until you’re ready to buy. At Dave Financial Services Inc., we walk you through the benefits and help you open an FHSA that’s fully optimized for your financial plan.
Who is Eligible for the FHSA?
To open an FHSA in Canada, you must:
- Be a resident of Canada.
- Be 18 years or older.
- Be a first-time homebuyer, meaning you (or your spouse or common-law partner) have not owned a home that you lived in during the current year or the previous four calendar years.
Our team will help verify your eligibility and advise you on the best time to open and contribute to your FHSA.
How Much Can You Contribute to Your FHSA?
- Annual Limit: $8,000 per year.
- Lifetime Limit: $40,000 total.
You can carry forward up to $8,000 in unused room to future years. For example, if you open an FHSA but don’t contribute the first year, you could contribute $16,000 the next year. Your contribution room begins only after you open the account.
Tip: The earlier you open your FHSA, the sooner your contribution room starts accumulating—even if you’re not ready to contribute right away.
What Can You Hold in an FHSA?
Your FHSA can hold a variety of investment options, including:
- Mutual Funds.
- ETFs (Exchange-Traded Funds).
- Stocks and Bonds.
- GICs (Guaranteed Investment Certificates).
- Segregated Funds.
- Savings.
With Dave Financial Services Inc., we’ll create a custom investment plan within your FHSA based on your timeline, goals, and risk tolerance—so you’re not just saving, you’re growing your money efficiently.
How Do FHSA Withdrawals Work?
When you’re ready to buy your first home, you can withdraw from your FHSA tax-free—as long as it’s for a qualifying home purchase. To qualify:
- The home must be located in Canada.
- You must occupy it as your principal residence within one year of purchase.
- The withdrawal must be made within 30 days of title transfer.
If your withdrawal meets these conditions, you pay no taxes and no repayment is required—unlike the RRSP Home Buyers’ Plan (HBP), which requires you to repay over 15 years.
Can You Transfer or Move FHSA Funds?
Yes! You can:
- Transfer between FHSAs at different financial institutions without affecting your contribution room.
- Transfer from your FHSA to an RRSP or RRIF tax-free if you choose not to buy a home.
- Transfer FHSA investment products like mutual funds or GICs, depending on the receiving institution.
Important: If you withdraw FHSA funds for a non-home-related purpose, it becomes taxable income. Work with Dave Financial Services Inc. to make sure you avoid costly mistakes.
FHSA vs TFSA vs RRSP for Homebuyers
| Feature | FHSA | TFSA | RRSP Home Buyers’ Plan (HBP) |
|---|---|---|---|
| Contributions Tax-Deductible | ✓ Yes | ✗ No | ✓ Yes |
| Withdrawals for Home Tax-Free | ✓ Yes | ✓ Yes (but less contribution room) | ✓ Yes (but must repay) |
| Withdrawal Repayment Needed | ✗ No | ✗ No | ✓ Yes – over 15 years |
| Contribution Limits | $8,000/year ($40,000 lifetime) | $7,000/year (2025) | 18% of your income of last year but $35,000 max |
Confused about FHSA vs TFSA vs RRSP? We’ll create a custom home savings strategy in Ontario using the right combination of these tools. Our advisors at Dave Financial Services Inc. in Ontario will help you determine whether to use one or a combination of all three accounts for your home savings strategy.
What Happens If You Don’t Use Your FHSA?
If you don’t end up buying a home, you can transfer your FHSA to your RRSP or RRIF at any time before the end of the 15th year after you open the account, or by the year you turn 71. This transfer is not taxable, and your RRSP contribution room is not affected.
What Are the FHSA Penalties?
Like other registered accounts, breaking FHSA rules can lead to CRA penalties:
- Overcontribution Penalty: 1% per month on excess contributions.
- Non-qualifying withdrawals: Counted as taxable income.
- Ineligible use of funds: May disqualify you from tax-free withdrawal status.
Book a free FHSA consultation in Ontario with Dave Financial Services Inc. to protect your account and stay compliant.
Ready to Open Your FHSA? Let Dave Financial Services Inc. Guide You
At Dave Financial Services Inc., we make it simple to open, invest, and manage your FHSA in Ontario. Whether you're just getting started or you need advice on combining your FHSA with an RRSP or TFSA, we’ll tailor a strategy that helps you achieve homeownership with confidence.